The argument against an airline bailout – By Jazz Shaw (Hot Air) / March 23 2020
Not too long ago, I posed the question, “am I a bad person for not caring if the airlines go bankrupt?” Admittedly, my reasons were a bit on the personal side and I’m sure that particular essay left me looking a bit vindictive. I focused on the deteriorating quality of service we’re provided, shrinking seat sizes, disappearing legroom and the massive profits the airlines were making until recently, much of which was plowed into huge stock buybacks. Why should the taxpayers bail them out?
it turns out, however, there’s a more pragmatic argument to be made against the requested bailout. It’s explained in an op-ed at the Washington Post by Richard Squire, a professor at the Fordham University School of Law who teaches corporate bankruptcy law. Rather than expressing any seething discontent with the major air carriers, Squire offers a more calm explanation of the reason that the airlines shouldn’t get a bailout. It’s because they don’t really need one. They can simply file for Chapter 11 bankruptcy protection and their business will return to normal when the pandemic has passed.
With flight bookings in free fall, U.S. airlines have gone to Washington with their hands out, asking for more than $50 billion in loans, guarantees and outright cash grants. And President Trump wants to give them the money, explaining in a White House briefing last week, “We don’t want airlines going out of business.”
Yet there is no danger that the airlines are about to disappear, leaving the flying public grounded after the coronavirus crisis passes. Without a bailout, the air carriers would renegotiate their terms of credit with their lenders outside court, or they would file for Chapter 11 bankruptcy protection. Either way, they would keep flying.
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